TMI Blog2014 (11) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision in [2009 (5) TMI 498 - CESTAT, BANGALORE] which has been upheld by Karnataka High Court [2012 (7) TMI 569 - KARNATAKA HIGH COURT] and as per the Foreign Trade Policy 2009-14 and are entitled to claim refund of Cenvat credit accumulated unutilised on export of the finished goods which appellant was not able to utilise otherwise under Rule 5 of CENVAT Credit Rules, 2004 - Decided in favour of assessee. - Appeal No. E/233 & 234/12 -Mum - Final Order Nos. A/701-702/2014-WZB/C-II(EB) - Dated:- 26-8-2014 - Ashok Jindal and P S Pruthi, JJ. For the Appellant : Shri M.H. Patil, Advocate with Ms. Manasi Patil, Consultant For the Respondent : Shri V.K. Agarwal, Addl. Comm. (AR) ORDER Per: Ashok Jindal, Member The appellants are in appeals against the impugned orders wherein their refund claim sanctioned by the Adjudicating Authority has been set aside by the ld. Commissioner (Appeals). 2. The brief facts of the case are that the Appellants are manufacturers of Polyester Staple Fibre ( PSF , for short). Out of total quantity of PSF about 75% to 80% is cleared in domestic market on payment of appropriate duty and balance 20% to 25% of PSF is expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat considering the stock holding of inputs for around seven to eight days and finished goods stock holding of the same period, and also based on the records maintained by following FIFO method, duty free imported inputs were not used in the manufacture of PSF exported during the disputed period. d) that only duty paid Cenvat availed inputs were used in manufacture of PSF exported during the disputed period, which was proved through documentary evidences. e) that by availing DEEC scheme for exports and claiming refund of duty paid on inputs used in goods exported, no double benefit has been accrued to the Appellants. f) that even if export are made under DEEC/DEPB/Advance Licence schemes and duty-free inputs are used, refund of unutilized credit under Rule 5 of CCR is admissible, as there is no double benefit, as held by the Tribunal in the following judgments: i) U.K. Paints (India) 2004 (170) ELT 280 (T) ii) Ispat Industries Ltd. 2006 (195) ELT 37 (T) iii) Bhilwara Spinners Ltd. 2011 (269) ELT 384 (T) iv) Bhilwara Spinners Ltd. 2008 (226) ELT 222 (T) v) Bhilwara Spinners Ltd. 2009 (90) RLT 614 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of duty for domestic clearance. Therefore, refund claim is not admissible. He further submitted that duty free import PTA MEG mandatorily has to be used for manufacture of export production. Therefore, the ld. Commissioner (Appeals) has rightly rejected the refund claims. 8. Heard both sides. Considered the submissions. 9. In this case during the course of argument ld. counsel submitted a detail statement which shows the use of duty paid PTA and MEG in the manufacture of PSF export. The said statement was sent to the concerned Commissionerate for verification purposes and in the verification report itself, it is observed the appellant made an effort to show that the usage of PTA and MEG which were duty paid were used in the manufacture of export goods. We further find that the chart/statement produced by the appellant has not been rejected by the Revenue and merely saying that the appellant has not been able to give the details of the PSF batch wise. Therefore, it is not possible to identify the actual use of PTA and MEG duty paid in manufacturing of PSF exported and in view of the continuing process, that therefore it is leading to double benefit. 10. In fact the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecise and clear. The appellant have to simply demonstrate that on exporting the finished goods credit has accumulated on account of receipt of duty paid inputs by the manufacturer, which they are unable to utilise for any other purpose, and therefore cash refund is the only way out. So for the sake of argument, even if, one assumes that the exported goods have been made by utilising, the duty free imported material, that itself cannot come in way of claiming the refund of accumulated Modvat credit which accrues only on receipt of duty paying inputs in the factory. Refund of credit can of course be denied if it is revealed that, the appellants could use the same for any other purpose. We do not find any such grounds applied for rejection. Therefore, we hold that the enquiry relating to the extent of use of duty free imported inputs in the export production was totally unwarranted and appellant's failure to furnish the information sought on this point cannot be considered to be a deficiency as alleged in the show cause notice. 14. Further in the case of Ispat Industries Ltd. (supra), this Tribunal observed as under:- Heard both sides. Under the impugned orders, the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of advance licence benefit is mentioned in Rule 5 of the Cenvat Credit Rules, 2004, the same cannot be read into it. Moreover, when the exemption notifications Nos. 43/2002-Cus. or 93/2004-Cus. in respect of the duty free imports made against Advance Licence issued against the exports made under Advance Licence Scheme, mention that for the benefit of the exemption under these notifications, the export obligations in respect of the Advance Licence should be discharged by export of finished products without availing the facility under Rule 18 or Rule 19(2) of the Central Excise Rules, 2002 and of these conditions are breached, as according to Department, facility of input duty rebate under Rule 18 of Central Excise Rules, 2002 is equivalent to cash refund of accumulated cenvat credit under Rule 5 of Cenvat Credit Rules, 2004, then it is the benefit of the duty exemption under these notifications in respect of the goods imported against the advance licence, which has to be denied, and not the benefit of cash refund under Rule 5 of the Cenvat Credit Rules, 2004 in respect of the exports. 7. In the case of Videocon International v. Commissioner of Customs, Mumbai (supra) cited by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in the case of Ispat Industries Limited (supra) refund claim under Rule 5 of Cenvat Credit Rules cannot be denied unless the assessee claimed drawback or rebate. The contention of the learned Authorized Representative (DR) that the respondent is getting the double benefit if the refund is allowed, not sustainable for the reason that in this case, respondents are getting the refund of the excise duty which they paid on the raw material used in the manufacture of exported goods. Under the advance licence scheme, the respondents are entitled to get the duty free material. The said duty free material may be replenished towards home consumption and set off is available to the respondent as Cenvat credit for payment of duty on final product which were ultimately cleared in home consumption with payment of duty. Therefore, I do not find any merit in the submission of the learned Authorized Representative (DR). So, there is no reason to interfere with the order of the Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected. In view of the above, it is clear that to claim refund under Rule 5 of CENVAT Credit Rules, 2004 on export of the finished goods, the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty sounds reasonable; that although there is actual-user condition in advance authorization scheme, actual use of imported goods in goods exported is not required, based on Hon'ble Tribunal judgment in the case of Kitply Industries v/s. CCE 20003 (153) ELT 366 (T); that one-to-one correlation of consumption of raw materials imported under DEEC scheme and goods exported is neither feasible nor warranted under central excise provisions; that even Board's Instruction F.No. 605/373/96-DBK dated 16.01.1997 also clarified that the term raw materials required for use does not mean that raw material must be physically incorporated; that judgments of Hon'ble Tribunal in Bhilwara Spinners 2009 (90) RLT 614 (T) and U.K. Paints 2004 (170) ELT 280 (T), relied upon by the assessee would support their contention that duty free imports under Advance Licence does not take away the substantial benefits of refund under Rule 5 of CCR r/w Notn. No. 5/2006-CE (NT) dated 14.3.2006; that if the legislative intention was to deny DEEC benefit along with refund under Rule 5, it would have specifically mentioned in the Notification, as it has mentioned drawback and rebate; that advance a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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